Star Metro - EU in showdown over Russian oligarch sanctions as deadline nears

The 27-nation bloc had looked set to remove asset freezes and visa bans from Russian businessmen Alisher Usmanov and Mikhail Fridman after demands from France, Luxembourg and Slovakia.

The move -- slammed by Kyiv -- was part of a compromise to extend sanctions on almost 3,000 other individuals and entities over the Ukraine war for three more years, before a deadline that could see them lapse at 2200 GMT Tuesday.

But that agreement hit an obstacle at the finishing line when Latvia lodged a last-ditch objection late on Monday.

"The Latvian government's stance has been unwavering. EU sanctions against Russia must be strengthened, not weakened," Foreign Minister Baiba Braze wrote online.

EU diplomats said after an early morning meeting that the deal involving the oligarchs remained on the table and that ambassadors would reconvene at 1200 GMT if it was rejected again.

The showdown over the sanctions has threatened to deal a blow to the EU's credibility at a time officials say the bloc should be ramping up the economic pain on Moscow.

Diplomats have been haggling for days over a way forward after France joined Slovakia in demanding Russian-Uzbek billionaire Usmanov to be removed from the blacklist.

Luxembourg then seized upon the demand by Paris to insist that if sanctions were lifted on Usmanov, then they should be lifted for Fridman as well.

Officials in Paris have cited "national security" concerns for their request on Usmanov, but refused publicly to give details.

The Financial Times reported that the demand may be linked to a potential prisoner release deal involving French nationals held in Azerbaijan.

Luxembourg has pushed for Fridman to be removed. Diplomats said the move comes as he is suing the country for 15 billion euros ($17 billion) for freezing his assets under EU sanctions.

More hawkish EU countries, including Poland and Baltic states, argued fiercely against easing the sanctions.

As a compromise under the deal on offer, they had got an agreement for the sanctions to remain in place for the next three years -- as opposed to the previous extensions of six months each.

- 'Need stability' -

Ukraine has reacted furiously to the prospect of the EU removing sanctions on the two prominent Russian businessmen seen as close to the Kremlin.

"Delisting is unacceptable and would send the wrong signal to Moscow at a time when pressure needs to increase," Ukraine's foreign minister Andriy Sybiga said.

"On the contrary, sanctions need to be tightened," he wrote online.

Multiple EU diplomats insisted that despite the standoff over Usmanov, there was widespread agreement that the EU sanctions should not be allowed to lapse.

EU top diplomat Kaja Kallas urged the bloc's member states Monday to maintain sanctions targeting Russia over the war on Ukraine.

"Sanctions are a core pillar of our response to Russia's war", she told reporters in New York after a meeting of EU foreign ministers.

"We need to have this stability," with sanctions remaining in place for a longer time, Kallas added.

The EU's sanctions blacklist includes key figures such as Russian President Vladimir Putin and Foreign Minister Sergei Lavrov.

Metals tycoon Usmanov and banking magnate Fridman are among dozens of Russian businessmen suing the EU over the sanctions.

Both were added to the sanctions list shortly after Russia's invasion of Ukraine in 2022 over allegations that their businesses provided significant revenues to the Kremlin.

S.Belanger--SMC